Landowners and residents from the Liverpool Plains, near Tamworth, sought to overturn a BHP licence to explore in the area in a case before the NSW Land and Environment Court yesterday.

Known as the Caroona Coal Action Group, it says the State Government failed to comply with the Mining Act 1992 when it issued exploration permit EL6505 to BHP in 2006.

The action is the latest step in a prolonged stoush between farmers and miners in the region, which could have big ramifications for others looking to exploit the region's coal resources.

If successful, the case could upset plans from other mining companies, including the Chinese Government-backed Shenhua, to mine in the area.

Farmers, some of whom have blockaded access to miners, fear that developing the coalfields could damage aquifers.

One prominent landowner and opponent of the miners, Timothy Duddy, said the Government had failed to follow proper procedures when it issued the permit that BHP paid $100 million for in 2006.

Shenhua paid $300 million for another licence in the area, which Mr Duddy compared with 2005 estimates that the permits were worth about $10 million.

"Everything's been done in haste because everyone gets so blinded by the amount of cash," Mr Duddy said outside the court.

Meanwhile, separate figures published yesterday from the NSW Minerals Council show state government mining revenues doubled to $1.3 billion last financial year and have risen 400 per cent since 2004-05.

In court documents, the community action group argued that the Minister for Mineral Resources, Ian Macdonald, did not have the proper powers to grant EL6505 to BHP.

Both BHP and the office of Mr Macdonald said they would not comment on the matter because it was before the court.

But last month, in an attempt to address some of the residents' concerns, BHP ruled out open-cut or long-wall mining underneath the region's floodplain.

The hearing continues in Sydney.